“The biggest problem facing the industry now is how to remove the excess capacity and consolidate them into the hands of a few stronger players. This consolidation of China's shipbuilding industry will not be a short process,” said Bao Zhangjing, director of the research center.
While the path of reversing the current downturn would see many casualties among the shipbuilding enterprises, the process is inevitable and the outcome would potentially elevate China's status as a global force in shipbuilding, Bao told delegates at the World Shipping (China) Summit 2013 in Ningbo on Wednesday.
“There will be a facelift for China's shipbuilding sector as the smaller and speculative yards would disappear, leaving only the bigger players in operation to raise the country's global competitiveness in terms of quality, management and services,” he said.
Chinese shipyards boast a total shipbuilding capacity of 80.1m dwt with utilisation at only 50-55% during the first nine months of this year, falling from about 75% capacity utilisation in 2012, according to Bao.
He further pointed out that Chinese yard capacity is anticipated to shrink by 30% in 2015. “This is testament of the severe downturn that Chinese shipbuilders are facing at the moment.” Bao said there is an urgent need to digest the unused yard space, either through demolishing the facilities or transferring the use of the space for offshore marine, which is witnessing greater demand due to active offshore oil and gas exploration activities.
Analysts have predicted that out of some 1,600 Chinese yards currently in operation, more than half are expected to shut down over the next one to two years.
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Maritime News to your Google News feed.
